Friday, September 27, 2013


I slipped away for a bit this morning (Simchat Torah!); I'll have more later, but for now here's the elsewhere stuff:

Filibustering something that gets a 100-0 vote (true whether or not Cruz's speech counts as a "filibuster" is the signature Senate Republican move.

No, the media isn’t out to get poor Ted Cruz

More on Cruz and the post-policy mainstream Republicans

Way back on Tuesday, I said we probably still won't get a shutdown. We'll see...

And of course, nobody cares about the deficit


  1. That poll Weigel and Drum talk about annoyed me. The poll has other questions about the deficit aside from the one they talk about. And they are only questions about how the deficit should be cut. Nothing about whether it should stay the same or be increased.

    I get that no one really cares about the deficit. And conservatives wouldn't be open to more spending regardless. But in the unlikely event that mainstream liberals tried to hold Obama and Democrats as accountable as Tea Partiers do with Republicans it would be nice if they weren't constantly primed to think about spending purely in terms of cuts.

  2. Speaking of the "shrinking" deficit, I was recalling how corporations, especially larger ones, often used to report "core" vs. "non-core" profitability. This practice has diminished somewhat in response to investor mistrust of what got dumped in "non-core"; the philosophy is nevertheless sound and reflects that what's not in continuing operations is less interesting to investors.

    For our purposes: has the "core" deficit really decreased since 2009? Oh, the overall deficit has come down, sure, but the 2009 deficit was chock-full of things like TARP and the rest of the laundry list of one-timers in response to the financial crisis. One-timers that, realistically, don't belong in a conversation of a deficit reconciliation, for the same reason companies used to break them out (before the trust was broken).

    Don't know if anyone has tried to break it out, but the "continuing" or "core" deficit may indeed have increased since 2009. If its fallen, its fallen far less than the overall deficit. Thinking about the deficit in a "core" v. "non-core" manner is the correct way to think about it; if it leads one to the conclusion that the core/relevant deficit has gone up, that's not only not indifference, its sound logic.

    1. I'm sure no one cares, but here's a more concrete example: suppose you were a shareholder of a public company teetering on the edge of bankruptcy; suppose your company loses $100 M AT in Q1. Suppose that $100 M is comprised of $30 M AT in operating losses, and $70 M AT related to a one-time charge.

      Let's assume that in Q2 your poor company loses $50 M AT, all of which is operating. On an all-in, reported basis, your company is doing a lot better, as they will have gone from $100 M in losses to only $50 M. But that's not what the talking heads on CNBC will say.

      The pros will describe your company as rapidly circling the drain, as your company will have gone from $30 M to $50 M in operating losses sequentially. The scale of the US budget deficit example may be different, but the direction may be roughly the same.

    2. Paul Krugman regularly makes a distinction that corresponds to what you're saying, if I'm not mistaken. In short, the special expenditures associated with the stimulus are already out of the system. He argues that the "core" deficit is also already resolved. The remaining deficit is a result of the underperforming economy; a real recovery would raise revenues and reduce expenditures sufficiently to eliminate the remaining deficit without further adjustments. He would argue, however, that you still need further spending to revive the economy and should worry about the deficit afterward.

    3. Scott, thanks for the clarification, that may well be the case, and certainly Krugman has a much better handle on the relevant "core v. non-core" distinction than a peanut-gallery guy like myself would.

    4. You know, I was thinking afterward about the TARP, too, and I wonder if it cost anything at all. The money was made up and handed out. Most of it was paid back with interest, and I believe some of the rest is still coming in. Taxes were never raised in the interim. What was the cost?

    5. Those are good questions that are beyond my pay grade. A related one: if TARP was funded in FY 2009 (as deficit spending) and repaid in later years; might those repayments also - artificially - make it look like the deficit is coming down sequentially more than it really is?

    6. Another good question. If it's true, though, would you want to do something to change it?

    7. Not from a financial reporting standpoint...but if it makes a big difference in the sequential change to the deficit, you probably want to know what that effect is, no?

  3. JB, I have to disagree with WaPo column about Cruz and the rest of the Republican mainstream (third link above).

    It's a really good point that Republicans don't have any choice other than Cruz's approach because the mainstream GOP isn't offering one.

    However, the mainstream GOP isn't offering anything else because they're scared of the Tea Party. Nobody is going to stand up and offer an alternative unless they have a deathwish for their political career. And Cruz is as much a Tea Party enforcer as any talk radio personality. Nonetheless, a good way to look at the issue.


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